China Mobile Ltd. agreed on June 9 to purchase an 18 percent stake in the Thai telecommunications conglomerate True Corp. for $881 million. This deal comes less than three weeks after the Thai military seized power in a coup d’etat—an event that went unmentioned in China Mobile’s announcement.
True Corp. controls Thailand’s third-largest mobile phone company, and was the first provider of 4G LTE service in the country. It is the only Thai mobile company without a foreign partner, and it has been struggling to compete with market leaders Advanced Info Service PLC and Total Access Communication Ltd. China Mobile’s investment—which accounts for nearly half of True’s most recent $2 billion share issue—will be used to help True’s expansion plans and also alleviate its debt.
Despite its 769 million subscribers, China Mobile has also been struggling domestically. In April, the state-owned company reported its lowest quarterly profit in five years. Its traditional sources of revenue—phone calls and text messaging—are quickly being replaced with popular mobile apps such as Tencent’s WeChat. In response, China Mobile has begun investing heavily in developing 4G networks.
The deal represents China Mobile’s first overseas purchase since its investment in Millicom International Cellular SA’s Pakistan unit in 2007. Since the announcement, shares in True Corp. have risen to their highest closing price since December.